Navistar swings to 3Q profit, beats estimates

By Dow Jones Newswires
Posted Sep. 8, 2010 at 7:15 a.m.

Navistar International Corp. swung to a fiscal third-quarter profit that handily topped analysts’ estimates as sales rebounded and margins widened sharply.

But the revenue growth was less than anticipated and the maker of heavy-duty vehicles lowered its top-line forecast for the year to $12 billion from its upbeat April view of $13.2 billion to $13.7 billion as it said it will defer military revenue to the next fiscal year. But it affirmed its earnings prediction, saying it “has found other measures” to meet the estimate.

Revenue rose for the first time in six quarters as military impacts bolstered results. Navistar’s military business is taking on increased importance this year.

The company in February got a $750 million order for mine resistant ambush protected trucks, the entirety of which was filled during the latest quarter, according to a recent Jefferies research note.

Meanwhile, the trucking industry has been mired in a sales slump as low freight volumes and reduced access to credit have kept trucking companies from replacing their fleets, though conditions have improved for shippers of late.

For the quarter ended July 31, Navistar posted a profit of $137 million, or $1.83 a share, compared with a year-earlier loss of $12 million, or 16 cents a share. Revenue jumped 29 percent to $3.22 billion following last year’s 37 percent plunge.

Analysts polled by Thomson Reuters had most recently forecast earnings of $1.47 on $3.58 billion in revenue.

Gross margin surged to 21.6 percent from 15.4 percent on the revenue gains and cost cuts.

The truck segment, by far the largest by sales, saw revenue climb 54 percent as it swung to the black. The engine segment swung to a small loss while parts earnings dropped 44 percent.

Shares of Navistar closed Tuesday at $44.36 and were inactive premarket. The stock is up 15 percent this year.

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